Auto substantiation for over-the-counter transactions

ABSTRACT

A flexible spending account system can be implemented according to one embodiment of the invention so as to automatically substantiate purchases made at a retailer merchant. For example, according to one embodiment of the invention, a method of authorizing products for purchase can be implemented by determining via a computer that a product requested for purchase at a point of sale by a consumer matches a qualified product category under the flexible spending account, sending an authorization request message for requesting use of said flexible spending account of said consumer, wherein said authorization request message comprises a total purchase amount field and a first qualified amount field for a first type of qualified items.

CROSS-REFERENCES TO RELATED APPLICATIONS

This application claims the benefit under 35 U.S.C. §119(e) of thefollowing U.S. patent applications which are hereby incorporated hereinby reference in their entirety for all purposes: Application No.60/641,483, filed Jan. 4, 2005, entitled “Method and System forDetermining Healthcare Eligibility”; Application No. 60/641,464, filedJan. 4, 2005, entitled “Method for Encoding Messages Between Two Devicesfor Transmission Over Standard Online Payment Networks”; and ApplicationNo. 60/641,597, filed Jan. 4, 2005, entitled “Auto Adjudication forOver-the-Counter Transactions”.

FIELD OF THE INVENTION

One embodiment of the invention relates generally to financialtransactions. More particularly, according to one embodiment of theinvention, a method of processing through a payment network the purchasetransactions made under a flexible spending account is described.

BACKGROUND

The Internal Revenue Service permits employers to offer tax-advantagedemployee benefits relative to healthcare reimbursement, transportation(transit and parking) and dependent care expenses.

Employers may provide employees with dollars for these purposes orpermit payroll deductions, up to the limits defined by the IRS. In bothcases, the employer is eligible for savings on FICA taxes on theseamounts. To be in compliance with IRS requirements, the employer mustadopt a program to ensure that these dollars are spent only for thequalified category of goods or services for the particular benefit area.There are several types of such employee benefits accounts, includingflexible spending accounts, healthcare reimbursement arrangements andhealth savings accounts. For convenience of reference, these types ofaccounts are referred to herein as “flexible spending accounts”.

A typical way of documenting and substantiating that the funds areproperly spent is to have the employee submit receipts that document thegoods or services for reimbursement. However, under this approach, theemployee must pay out of their own funds, then, wait to get reimbursed.Additionally, this approach involves considerable manual staff supportto receive and review the receipt documentation, then cut checks orarrange for a funds transfer into the employee's checking account.

Recently, payment cards have been added as a means of permittingemployees to use a debit, credit or prepaid (“payment”) card to directlyaccess the funds account. While this increases the convenience for theemployee, it may create instances in which the employee has to be askedto send a copy of the receipt to document that the goods or servicespurchased with the payment card were, in fact, qualified items for thetype of benefit account. To help reduce the administrative expenseassociated with getting this follow-up receipt documentation, some cardissuers place restrictions on the locations where the payment cards canbe used. As a result of the account/funds usage restrictions, the cardissuer declines transactions at locations that are not clearlyidentifiable as the qualified type, even though the goods or servicesbeing purchased may be qualified products/services. This results in aninconvenience for the cardholder and incurs the cost of manual receiptdocumentation and funds reimbursement.

SUMMARY

According to one embodiment of the invention, a method of authorizing apayment transaction request through a payment network is described for aproduct under a flexible spending account of a consumer, wherein themethod comprises determining via a computer that a product requested forpurchase at a point of sale by the consumer matches a qualified productcategory under the flexible spending account, and sending anauthorization request message for requesting use of the flexiblespending account of the consumer, wherein the authorization requestmessage comprises: a total purchase amount field and a first qualifiedamount field for a first type of qualified item(s) to enable thereal-time substantiation of the purchase as constituting qualified itemsfor the type of flexible spending account.

According to another embodiment of the invention, a split tender paymentsystem is disclosed for a first product authorized under a flexiblespending account of a consumer and a second product which is notauthorized under the flexible spending account wherein the methodcomprises sending an authorization request message through a paymentnetwork for requesting use of the flexible spending account of theconsumer for the first product, receiving authorization to pay for thefirst product with the flexible spending account, determining that thesecond product is not authorized under the flexible spending account,and processing payment for the second product with an alternative sourceof payment from the flexible spending account.

According to yet another embodiment of the invention, a method ofsubmitting product information through a payment network for a flexiblespending account of a consumer for processing by an auditor of theflexible spending account is disclosed wherein the method comprisesconducting a transaction with the consumer for purchase of a productunder the flexible spending account, preparing with a computer atransaction record of the conducted purchase, and sending thetransaction record to the auditor of the flexible spending account. Useof the word “auditor” is intended to connote someone who reviews oradministers a flexible spending account. For example, this could includeany company that administers a flexible spending account, including ahealthcare insurance company, a third party agent of the employer or thehuman resources department of an employer, that monitors the use of theflexible spending account purchases, or the US Internal Revenue Servicethat audits the purchases made under a flexible spending account.

BRIEF DESCRIPTION OF THE DRAWINGS

FIG. 1 illustrates a flow diagram of a payment transaction authorizationsystem according to one embodiment of the invention.

FIG. 2 illustrates a computer network operable to implement anauthorization and settlement process according to one embodiment of theinvention.

FIG. 3 illustrates a block diagram of a computerized device such asthose used in FIG. 2.

FIG. 4 illustrates a flow chart demonstrating a method of implementingan authorization request according to one embodiment of the invention.

FIGS. 5A, 5B and 5C illustrate a flow chart demonstrating a method ofimplementing an authorization request according to one embodiment of theinvention.

FIG. 6 illustrates a flow chart demonstrating a method of implementing asplit tender according to one embodiment of the invention.

FIG. 7 illustrates an authorization request according to one embodimentof the invention.

FIG. 8 illustrates an alternative authorization request according to oneembodiment of the invention.

FIG. 9 illustrates an authorization request according to yet anotherembodiment of the invention.

FIG. 10 illustrates a flow diagram for implementing an auditing processfor program compliance according to one embodiment of the invention.

FIG. 11 illustrates a flow chart demonstrating a method of auditing aflexible spending account according to one embodiment of the invention.

FIGS. 12A and 12B illustrate a flow chart demonstrating a method ofproviding transaction data according to one embodiment of the invention.

FIG. 13 illustrates a standard settlement record and transaction recordaccording to one embodiment of the invention.

FIG. 14 illustrates a more detailed view of the transaction recordportion of FIG. 13 according to one embodiment of the invention.

FIG. 15 illustrates an authorization response message according to oneembodiment of the invention.

DESCRIPTION

Referring now to FIG. 1, a flow diagram is shown that illustrates amethod of implementing a payment transaction authorization request andpayment transaction authorization response for a flexible spendingaccount. A flexible spending account is intended to encompass employeebenefit accounts sanctioned by government authorities, such as theInternal Revenue Service in the United States, that offer tax advantagedemployee benefits. Examples of flexible spending accounts include thosethat cover healthcare expenses, transportation (transit and/or parking)expenses, and dependent care expenses. Health savings accounts (HSA's)and healthcare reimbursement arrangements (HRA's) are other examples oftax advantaged employee benefit accounts that are referred to herein asflexible spending accounts for the sake of convenience.

FIG. 1 shows a system that can be used for processing transactions thatare initiated, for example, at a retailer or service provider. There aremany consumers that do not presently use their flexible spendingaccounts at retailers or service providers in an over-the-counterfashion because the current systems are not configured to process suchtransactions. Thus, many items cannot easily be purchased under theflexible spending accounts without undergoing the timely process ofsubmitting receipts and additional paperwork to verify that the purchasewas made and was made for an item that was qualified under the flexiblespending account. Therefore, FIG. 1 illustrates a system that providesan auto substantiation function by determining whether a qualifiedproduct under a flexible spending account is being purchased and thus isentitled to be purchased with a flexible spending account card, forexample.

FIG. 1 shows an eligible card holder 100 presenting an item for purchaseat a retailer or service provider 104. The retailer's electronic cashregister system can support a list of qualified products, for example alist of qualified product codes that are stored on an electronic cashregister. This list of qualified product codes establishes a list ofqualified product categories that are eligible for card usage.Additionally, the electronic cash register can support a list ofidentifying card programs. For example, the first six digits of theflexible spending account card number can be utilized to identify theaccount as being a flexible spending account that is eligible forpurchase of goods or services from that particular merchant. Thus, FIG.1 illustrates the electronic cash register 108 as storing the list ofcodes and eligible card programs. An electronic cash register system isa term used to describe both integrated systems where terminalfunctionality is built within the cash register itself as well assystems where the POS terminal is a stand-alone device that interactswith the electronic cash register.

When the card holder presents an eligible payment card, the retailer canmatch the card number with the list of eligible card programs. Uponidentifying an eligible card program, the retailer's electronic cashregister system can evaluate the product inventory code in the checkoutbasket against the list of qualified product categories. It should beunderstood that a payment card is a portable consumer device. Examplesof portable consumer devices include credit cards, debit cards, prepaidcards, healthcare insurance cards, smart cards (integrated circuit chipcards), contactless chip cards (using radio frequency identification),driver's licenses, personal digital assistants, ATM cards, securitybadges, access badges, stored value cards, biometric identificationcards, pagers, and the like. Interaction between a retailer's electroniccash register system or POS terminals and the portable consumer devicecan be facilitated using any suitable optical, magnetic,electromagnetic, or electronic mechanism. In some embodiments, theportable consumer device is in the form of a card and has a magneticstripe.

Upon determining that the product code of the item presented forpurchase matches one of the qualified product codes in the listaccessible from the electronic cash register and that the flexiblespending account identifier provided by the card holder matches one ofthe eligible card programs in the list of eligible card programs that isaccessible from the electronic cash register, an authorization requestmessage is formatted by the retailer 104. This authorization requestmessage is sent to the retailer's acquirer processor system 112 inFIG. 1. Furthermore, FIG. 1 shows that the acquirer processor systemforwards the authorization request message to the payment authorizationsystem 116 which in turn forwards the authorization request message tothe issuer processor system 120. The issuer processor system 120 or athird party can review the authorization request message so as todetermine whether the purchase is authorized under the flexible spendingaccount. This can be accomplished by reviewing the product amount or byreviewing a product code and product amount submitted as part of theauthorization request message.

Once the determination is made by the issuer or its associated thirdparty (such as a third party administrator or end user client of theissuer), a payment transaction authorization response message can beformatted. This is returned to the retailer or service provider. Onealternative is for partial authorization to be granted for the productunder the flexible spending account while denying authorization for thebalance of the purchase amount. In that situation, the retailer canrequest additional payment means from the cardholder. Thus, a purchaseof an authorized product can be made with the flexible spending accountwhile cash, check, or other payment card is used to pay fornon-authorized products.

FIG. 2 illustrates a system for implementing the transaction systemshown in FIG. 1. Namely, FIG. 2 illustrates a merchant computer system204 which is in communication with an acquirer computer system 212. Theacquirer computer system in turn is in communication with the paymentauthorization system 216. For example, under the Visa system, theVisaNet system can be utilized to implement the payment authorizationsystem. The payment authorization system 216 is in communication withthe issuer of the flexible spending account. While the issuer systemitself may process the authorization transactions, the issuer system 220shown in FIG. 2 may also communicate with a third party administrator ofthe flexible spending account. This could be a third party whichperforms the processing of transactions for the issuer. Alternatively,it could be the client of the issuer, such as a health insurance companyimplementing a health reimbursement arrangement or a health savingsaccount.

FIG. 3 illustrates a block diagram of a computing device which can beimplemented to accomplish the computer system shown in FIG. 2. Forexample, FIG. 3 broadly illustrates how individual system elements canbe implemented. System 300 is shown comprised of hardware elements thatare electrically coupled via bus 308, including a processor 301, inputdevice 302, output device 303, storage device 304, computer-readablestorage media reader 305 a, communications system 306, processingacceleration (e.g., DSP or special-purpose processors) 307 and memory309. Computer-readable storage media reader 305 a is further coupled tocomputer-readable storage media 305 b, the combination comprehensivelyrepresenting remote, local, fixed and/or removable storage devices plusstorage media, memory, etc. for temporarily and/or more permanentlycontaining computer-readable information, which can include storagedevice 304, memory 309 and/or any other such accessible system 300resource. System 300 also comprises software elements (shown as beingcurrently located within working memory 391 including an operatingsystem 392 and other code 393, such as programs, applets, data and thelike.

System 300 has extensive flexibility and configurability. Thus, forexample, a single architecture might be utilized to implement one ormore servers that can be further configured in accordance with currentlydesirable protocols, protocol variations, extensions, etc. However, itwill be apparent to those skilled in the art that embodiments may wellbe utilized in accordance with more specific application requirements.For example, one or more system elements might be implemented assub-elements within a system 300 component (e.g. within communicationssystem 306). Customized hardware might also be utilized and/orparticular elements might be implemented in hardware, software(including so-called “portable software,” such as applets) or both.Further, while connection to other computing devices such as networkinput/output devices (not shown) may be employed, it is to be understoodthat wired, wireless, modem and/or other connection or connections toother computing devices might also be utilized. Distributed processing,multiple site viewing, information forwarding, collaboration, remoteinformation retrieval and merging, and related capabilities are eachcontemplated. Operating system utilization will also vary depending onthe particular host devices and/or process types (e.g. computer,appliance, portable device, etc.) Not all system 300 components willnecessarily be required in all cases.

Referring now to FIG. 4, a flow chart 400 illustrates a method ofconducting the authorization transaction according to one embodiment ofthe invention is shown. In block 404, a determination is made via acomputer that a product requested for purchase at a point of sale by aconsumer matches a qualified product category under a flexible spendingaccount. It should be understood that use of the word “product” isintended to mean not only goods, but also services. In block 408, anauthorization request message is sent for requesting use of the flexiblespending account of the consumer. In block 412 a format for theauthorization request message is utilized that comprises a totalpurchase amount field, as well as a first qualified amount field for afirst type of qualified item(s). This amount field can include the totalpurchase price for one or more qualified items. A more detailed methodaccording to one embodiment of the invention can be seen in FIGS. 5A,5B, and 5C.

FIGS. 5A, 5B, and 5C illustrate a flowchart that demonstrates a methodof conducting a transaction according to the system shown in FIG. 1. Inblock 504, a set of qualified product categories eligible for use undera flexible spending account are stored. For example, these can be storedin the memory of an electronic cash register or in a data storage devicewhich is accessible by the merchant utilizing the electronic cashregister. Thus, it is not required that the qualified product categoriesbe stored at the electronic cash register or merchant processing deviceas long as they are accessible to the merchant. In block 508 a set ofaccount identifiers for identifying a set of flexible spending accountsis stored. Again, these can be stored at the electronic cash register orat a different storage location.

In block 512 the consumer presents the consumer flexible spendingaccount identifier for use in the purchase. For example, the merchantcan obtain the consumer's flexible spending account identifier from apayment card presented by the consumer. Alternatively, other types ofdevices can be utilized to obtain the identifier for the flexiblespending account as would be understood by those of ordinary skill inthe art. In block 516 a determination is made as to whether theconsumer's flexible spending account identifier matches one of theaccount identifiers in the list accessible from the electronic cashregister. The list of valid account identifiers can include not only theconsumer's flexible spending account identifier, but also thoseidentifiers used for other plans. One way to implement this is byutilizing the first six digits of an account identifier for purposes ofidentifying all the flexible spending accounts associated with a certainplan. Thus, for example, the bank identification numbers (BIN) utilizedby Visa on its payment cards can be grouped via the first six numbers ofthose bank identification numbers to indicate participation in aparticular flexible spending account program. Individuals participatingin a particular flexible spending account plan can be identifiedparticularly by the remaining numbers in the bank identification number.This provides an easy and efficient way to identify a flexible spendingaccount card without requiring storage of all flexible spending accountbank identification numbers at the electronic cash register. Additionalflexible spending account programs accepted by the merchant can berecognized by the first six digits of their respective BIN numbers, aswell.

In block 520 a product inventory code is obtained for a productrequested for purchase by the consumer. For example, the Stock KeepingUnit (SKU) for a product can be obtained by scanning the barcode from aparticular product or entering the SKU for a particular service beingpurchased from the merchant. In block 524 a determination is made as towhether the product inventory code matches one of the qualified productcategories. By utilizing SKU codes, a simple table look-up can beimplemented to determine whether the SKU for a particular productmatches one of the product inventory codes stored at the electronic cashregister or accessed via the electronic cash register.

If the product matches a qualified product category and the cardidentifier matches a valid account identifier, a payment networkauthorization request message can be sent with additional informationregarding the amount of the qualified items included in theauthorization request. In block 528 an authorization request message issent requesting use of the flexible spending account payment card of theconsumer. The authorization request message can be formatted in avariety of ways. For example, FIGS. 7, 8, and 9 illustrate alternativeways of formatting an authorization request for a product beingpurchased with a flexible spending account. One example is that shown inblock 532 which involves utilizing for the authorization request messagethe following fields: total purchase amount field; first qualifiedamount field for a first type of qualified item(s) (including tax on thequalified item(s)); second qualified amount field for a second type ofqualified item(s). This format allows an authorization request to bemade for a purchase of products that fall into different categories. Forexample, this could include a first product that falls into the transitreimbursement category and a second product that falls into the healthcare category. This format is shown in more detail in FIG. 8.

FIG. 8 illustrates that the standard authorization request message canbe formatted with normal fields including the total amount of purchaseas well as additional fields for the total amount for the first type ofqualified product and the total amount for the second type of qualifiedproduct. FIGS. 7 and 9 show alternative embodiments of formatting anauthorization request message.

FIG. 7 illustrates that a standard authorization request message 704 canhave appended to it a field 708 for the total amount of qualifiedproduct items that is being submitted as part of the authorizationrequest. Thus, FIG. 7 illustrates an authorization request message thatwould be implemented based upon price. By virtue of the electronic cashregister determining that the product(s) was a qualified product fromthe list of qualified products, the initial eligibility test would havebeen implemented by the electronic cash register.

Alternatively, FIG. 9 illustrates an authorization request message thatincludes product information. Thus, FIG. 9 shows a standardauthorization request message having the total amount of purchase field,as well as appended fields for the product code, sales amount, and taxamount. This information could be forwarded to the issuer or third partyadministrator working on behalf of the issuer, or the client of theissuer to determine whether the submitted product and the amount of thesubmitted product qualified under the flexible spending account forauthorization.

Referring again to FIG. 5B, block 536 shows that the authorizationrequest message is received at an account issuer processing system.Thus, for example, the authorization request message can be sent via theacquirer of the merchant and the transaction processing system to theissuer. In block 540 a determination is made as to whether the flexiblespending account transaction is authorized. The determination can bemade by the issuer of the flexible spending account. Alternatively, athird party, such as a processor or third party administrator who worksfor the issuer can be tasked with the job of determining whether thesubmitted authorization request qualifies under the flexible spendingaccount guidelines. Furthermore, the client of the issuer, such as aninsurance company, can perform the task as well. Also, a determinationcan be made, by the issuer, for example, as to whether the flexiblespending account contains a sufficient funds to pay for the product.

Once a determination is made in regard to the authorization request, anauthorization approval message can be formatted to reply to theauthorization request message as shown in block 544. In block 548, theauthorization approval message is received at the merchant, such as atthe electronic cash register of the merchant, at which point the salecan be completed as shown in block 552.

The authorization approval message can be formatted according to FIG.15. FIG. 15 shows a standard payment network authorization approvalmessage with additional appended fields. Namely, a product code fieldfor identifying the product submitted for authorization is shown. Also,a line item total for the particular product is shown. Furthermore, aflag indicating whether the product category was eligible or ineligibleis shown. In addition, a partial approval field can be utilized toindicate whether total approval is given for use of the flexiblespending account being utilized to fund the transaction or whether onlypartial approval is given for the particular product being submitted. Inaddition, a field indicating the approved amount can be used. Also, theoriginal total amount of the transaction can be appended as well.

As noted in FIG. 15, partial approval can be given through theauthorization response. This is beneficial in that it allows atransaction to be implemented for the entire purchase amount using theflexible spending account and then allows a split tender transaction tobe implemented for the balance of the transaction amount that was notauthorized in the authorization response. Thus, FIG. 6 illustrates aflow chart demonstrating a method of implementing such a split tendertransaction. Namely, in block 604, the authorization request message issent requesting use of the flexible spending account. In block 608,authorization is received to pay for a first product with the flexiblespending account. Thus, this would be a product that satisfied theregulations of the flexible spending account and was considered anapproved product under the guidelines of that particular flexiblespending account. In block 612 a determination is made that a secondproduct submitted as part of the same purchase transaction is notauthorized under the flexible spending account. Thus, for example, ifthe consumer is also purchasing a transit pass, that would not satisfythe requirements of the flexible spending account. As a result, theauthorization response message returned by the issuer would indicatethat the entire transaction purchase amount was not authorized. Rather,only the price of the first product would be authorized. In block 616, asplit tender payment process can be implemented by paying for the secondproduct with an alternative source of payment other than the flexiblespending account. Thus, the consumer could present another payment cardas well as cash or check for completing the purchase transaction. Thisprovides a benefit in that it allows the consumer to utilize his or herflexible spending account payment card and then complete the remainderof the purchase with an alternative form of payment. Further, the methodsupports an issuer authorization of a partial amount of the qualifiedtotal if the cardholder does not have a sufficient available balance toapprove the full qualified total amount. This provides the benefit ofpermitting the cardholder to complete the purchase with spilt tender,using cash, checks or another payment card.

Once an authorization request message has been submitted and anauthorization approval message has been received, the transaction stillneeds to be settled. Thus, a settlement function is typicallyimplemented by a batch process by a merchant in submitting all thetransactions for all payments accepted periodically, such as at the endof the day. For example, merchant ABC may submit all the records of thetransactions that were made by sending a batch message to the merchant'sacquiring bank at the end of the day. The merchant's acquiring bankwould then submit all authorized transactions to the respective paymentnetwork. Thus, this provides a unique vehicle for forwarding transactioninformation for use in auditing the transactions made with a flexiblespending account.

Referring now to FIG. 10, a flow diagram illustrating a method ofconfirming program compliance is shown. A payment network settlementtransaction can be utilized according to one embodiment of the inventionto include additional data that provides an issuer or end user clientwith information about particular products that were purchased under theflexible spending account. Thus, FIG. 10 illustrates how a merchant canformat a batch process to send to its acquiring bank about all thetransactions that were made under flexible spending accountsadministered by participating issuers or end user clients. Furthermore,FIG. 10 illustrates that the payment network settlement process can beutilized to send information to the issuer or end-user client aboutparticular flexible spending account transactions that were made so asto allow the issuer or end user client to confirm that a transactionthat was approved by amount, for example, was actually a productauthorized under the flexible spending account.

FIG. 10 shows that a standard settlement record can be appended withproduct description and amount information for qualified items purchasedunder the flexible spending account. This can be formatted by theretailer 104 as part of the settlement transaction process. The retailercan forward the standard payment network settlement record and theadditional information record about the flexible spending accounttransactions (referred to herein as the transaction records) to theacquirer processor system 112 which in turn, forwards it to the paymentauthorization system 116. The standard payment network settlement recordand the appended transaction record can then be forwarded to the issuerprocessor system 120. At this point the standard payment networksettlement record can be utilized by the issuer as part of thesettlement process and the transaction record can be separately used bythe issuer or forwarded to a third party administrator or end userclient. The transaction record can be utilized, for example, by the enduser client to check program compliance. As noted earlier, one method ofimplementing the authorization request is for the merchant to perform acheck as to whether a particular product is eligible under the flexiblespending account by comparing the product code of the product with alist of product codes accessible via the electronic cash register. Theissuer then approves the amount of the purchase. Thus, the authorizationrequest system according to this embodiment is dependent upon the checkmade by the electronic cash register. The compliance system shown inFIG. 10 allows a program compliance check to be made by the end userclient by retrieving additional information, such as product code anddescription to confirm that a particular product is a qualified productunder the guidelines of the flexible spending account. It is noted thatreceiving qualified product amounts in payment network authorizationmessages may be used on a stand-alone basis or in conjunction withreceiving product line item detail transaction records in paymentnetwork settlement records, and vice versa.

FIG. 11 illustrates a flow chart demonstrating a method of implementingthe compliance procedure according to one embodiment of the invention.In flow chart 1100, block 1104 illustrates that a transaction with aconsumer can be conducted for purchase of a product with a flexiblespending account. A computer transaction record of the conductedpurchase can be prepared in block 1108. Then, the transaction record canbe sent to an auditor of the flexible spending account in block 1112.

FIGS. 12A and 12B illustrate a flow chart 1200 which demonstrates amethod according to a more detailed embodiment of the invention. Inblock 1204 a transaction with a consumer is conducted for purchase of aproduct using a consumer's flexible spending account. An authorizationrequest is submitted and authorization is received for the purchase withthe flexible spending account as shown in block 1208. A computertransaction record can then be prepared for the purchase. For example,one example of a transaction record would comprise a product descriptionfield, a purchase amount field, and a tax amount for the purchase amountas shown in block 1212. This can be seen in more detail in FIGS. 13 and14.

FIG. 13 shows that a payment network settlement record can be appendedwith additional information about a flexible spending account purchase,wherein that information is referred to as a transaction record. FIG. 14illustrates a more detailed view of the transaction record shown in FIG.13. Namely, FIG. 14 shows that a product code field can be entered aspart of the transaction record. In addition, the quantity of productscan be included as an additional field. Also, an item descriptorproviding additional information about the product can be included as afield. Also, a line item amount can be included to indicate the amountfor the item. Similarly, a tax field can be included to indicate the taxfor the item. Furthermore, the line item total for the product can beincluded as a field. Similarly, a product category field can beincluded. All of this information, or only part of it, can be utilizedfor the transaction record.

In block 1216 the transaction record is appended to the payment networksettlement record as was noted in FIG. 13. The transaction record andthe settlement record can then be sent to an acquirer of the merchant asshown on block 1220 and forwarded to the payment authorization system asshown in block 1228. Furthermore, the transaction record and settlementrecord can be forwarded by the payment network system to the issuer ofthe flexible spending account as shown in block 1232. At this point, thetransaction record can be sent to an auditor of the flexible spendingaccount as shown in block 1236. Alternatively, the issuer may beconfigured to process the transaction record itself. Thus, for example,an issuer may determine whether a transaction record for a health careaccount was properly considered a qualified transaction. If the issuerdoes not perform the compliance process, it may forward the transactionrecord to a third party processor or an end user client. Thus, forexample, the third party processor may be tasked with the job ofdetermining whether a transaction was properly qualified according tothe guidelines of a flexible spending account. Similarly, the end usermay be configured to perform the compliance process itself.

Block 1240 shows that the payment network settlement record is utilizedto complete payment on the transaction as would normally be conducted byan issuer.

One of the benefits of the forwarding of the transaction informationthrough a payment network settlement record to the issuer or end userclient is that a statement can be compiled for forwarding to theconsumer that indicates all the transactions that were made under theflexible spending account. Additionally, transaction records forwardedby multiple merchants can be delivered to the issuer or end user clientusing the same format and delivery method. This can be of assistance tothe consumer for purposes of reporting on the consumer's taxes as shownin block 1248.

A benefit of one embodiment of the invention is that these processes canserve as a standard that multiple retailers, issuers, processors andthird party administrators can use. Thus, rather than requiring anindividual or company to provide documentation regarding purchases madewith flexible spending account payment cards, the authorization andsettlement procedures can be used to supply the informationexpeditiously. Similarly, rather than requiring a retailer to provide toa third party administrator or its processor a list of items that werepurchased with a flexible spending account payment card via a directconnection between the retailer (or retailer's agent) and the thirdparty administrator—a system that involves a great amount of overhead inview of the fact that the retailer would have to configure a directconnection with each and every third party administrator—presentembodiments of the invention avoid such overhead and do not requireretailers to support different database extract formats for differentthird party administrators and/or processors for third partyadministrators, nor do such embodiments require the third partyadministrators and/or processors to support the receipt of differentformats, media, and communications methods for different retailers.

A benefit of one embodiment of the invention can allow the real-timesubstantiation of qualified amounts for payment card expenditures fromflexible spending accounts, thereby reducing the costs associated withflexible spending accounts and the related substantiation requirements.

While various embodiments of the invention have been described asmethods or apparatus for implementing the invention, it should beunderstood that the invention can be implemented through code coupled toa computer, e.g., code resident on a computer or accessible by thecomputer. For example, software and databases could be utilized toimplement many of the methods discussed above. Thus, in addition toembodiments where the invention is accomplished by hardware, it is alsonoted that these embodiments can be accomplished through the use of anarticle of manufacture comprised of a computer usable medium having acomputer readable program code embodied therein, which causes theenablement of the functions disclosed in this description. Therefore, itis desired that embodiments of the invention also be consideredprotected by this patent in their program code means as well.Furthermore, the embodiments of the invention may be embodied as codestored in a computer-readable memory of virtually any kind including,without limitation, RAM, ROM, magnetic media, optical media, ormagneto-optical media. Even more generally, the embodiments of theinvention could be implemented in software, or in hardware, or anycombination thereof including, but not limited to, software running on ageneral purpose processor, microcode, PLAs, or ASICs.

It is also envisioned that embodiments of the invention could beaccomplished as computer signals embodied in a carrier wave, as well assignals (e.g., electrical and optical) propagated through a transmissionmedium. Thus, the various information discussed above could be formattedin a structure, such as a data structure, and transmitted as anelectrical signal through a transmission medium or stored on a computerreadable medium.

It is also noted that many of the structures, materials, and actsrecited herein can be recited as means for performing a function orsteps for performing a function. Therefore, it should be understood thatsuch language is entitled to cover all such structures, materials, oracts disclosed within this specification and their equivalents,including the matter incorporated by reference.

1. A method of authorizing a payment transaction request through apayment network for a product under a flexible spending account of aconsumer, said method comprising a plurality of steps, each said stepbeing performed by one or more network devices by the execution ofsoftware, each said network device being in communication with thepayment network, wherein the steps include: obtaining a flexiblespending account identifier for the flexible spending account, and aproduct inventory code corresponding to the product; forming a paymentnetwork authorization request message requesting use of the flexiblespending account for the payment transaction for the product, whereinthe payment network authorization request message includes: the flexiblespending account identifier for the flexible spending account; theproduct inventory code corresponding to the product; a total purchaseamount for the product; and an address of a merchant; sending thepayment network authorization request message from the address of themerchant to an address of an acquirer for the merchant; sending thepayment network authorization request message from the address of theacquirer for the merchant to an address of a payment network system;sending the payment network authorization request message from theaddress of the payment network system to an address of an issuer of theflexible spending account; determining, using the payment networkauthorization request message, that the flexible spending accountidentifier is valid by matching the flexible spending account identifieragainst a stored set of flexible spending account identifiers, and if sothen: determining that the product inventory code matches a qualifiedproduct category under the flexible spending account, and if so then:determining a qualified amount of the total purchase amount eligible foruse of the flexible spending account for the payment transaction for theproduct, and if so then: determining that the flexible spending accountfor the payment transaction has sufficient assets for paying thequalified amount of the total purchase amount, and if so, then: sending, in response to the payment network authorization requestmessage, an authorization response from the address of the issuer to theaddress of the payment network system, wherein the authorizationresponse includes the qualified amount of the total purchase amounteligible for use of the flexible spending account for the paymenttransaction for the product and an authorization for the use of theflexible spending account payment for the payment transaction;  sendingthe authorization response from the address of the payment networksystem to the address of the acquirer for the merchant;  sending theauthorization response from the address of the acquirer for the merchantto the address of the merchant.
 2. The method as claimed in claim 1,wherein said payment network authorization request message furthercomprises a description field for the matching said obtained productinventory code.
 3. The method as claimed in claim 1, wherein saidpayment network authorization request message further comprises tax onthe product.
 4. The method as claimed in claim 1, wherein said paymentnetwork authorization request message further comprises, for each of aplurality of different said products: the product inventory code for therespective said product; and the total purchase amount for therespective said product.
 5. The method as claimed in claim 4, whereinsaid payment network authorization request message further comprises,for each of a plurality of different said products, the descriptionfield for the respective said product.
 6. The method as claimed in claim1, wherein the steps further comprise accessing a set of said qualifiedproduct categories eligible for usage under said flexible spendingaccount.
 7. The method as claimed in claim 1, wherein the steps furthercomprise: receiving a plurality of said payment network authorizationrequest messages from a plurality of said merchants at the address ofthe issuer of said flexible spending account; grouping the paymentnetwork authorization request messages received from said plurality ofsaid merchants and associated with the particular flexible spendingaccount as a set of transaction records; and sending said set of saidtransaction records from an address of said issuer to an address of anauditor.
 8. The method as claimed in claim 1, wherein the steps furthercomprise appending said payment network authorization request message toa payment network settlement record.
 9. The method as claimed in claim8, wherein the steps further comprise utilizing said payment networksettlement record to complete payment for the payment transaction whileforwarding said payment network authorization request message to anaddress of an auditor for monitoring flexible spending accountcompliance.
 10. The method as claimed in claim 1, wherein: the obtainingof the flexible spending account identifier for the flexible spendingaccount and the product inventory code corresponding to the product areobtained at an electronic Point Of Service terminal (POS); and the stepsfurther comprise receiving the authorization response at the POS. 11.The method as claimed in claim 1, wherein the steps further comprise,when the qualified amount of the total purchase amount eligible for useof the flexible spending account for the payment transaction for theproduct is for a partial amount of the total purchase price, receivinginput acknowledging payment, via a payment source other than theflexible spending account, for the difference between the total purchaseamount for the product and the qualified amount of the total purchasefor the product.
 12. The method as claimed in claim 11, wherein thesteps further comprise completing a sale of other said productsrequested for purchase in the payment transaction.
 13. A method ofauthorizing a payment transaction through a payment network for aplurality of different products under a flexible spending account of aconsumer, said method comprising a plurality of steps, each said stepbeing performed by one or more network devices by the execution ofsoftware, each said network device being in communication with thepayment network, wherein the steps include: obtaining a flexiblespending account identifier for the flexible spending account, and aproduct inventory code corresponding to each said product in theplurality of different products; forming a payment network authorizationrequest message requesting use of the flexible spending account for thepayment transaction for the respective said products, wherein saidpayment network authorization request message includes: the flexiblespending account identifier for the flexible spending account; anaddress of a merchant; and for each of the respective said products: atotal purchase amount for the product; and the product inventory codecorresponding to the product; sending the payment network authorizationrequest message from the address of the merchant to an address of anacquirer for the merchant; sending the payment network authorizationrequest message from the address of the acquirer for the merchant to anaddress of a payment network system; sending the payment networkauthorization request message from the address of the payment networksystem to an address of an issuer of the flexible spending account;determining, using the payment network authorization request message,that the flexible spending account identifier is valid by matching theflexible spending account identifier against a stored set of flexiblespending account identifiers, and if so then for each of the respectivesaid products: determining that the product inventory code matches aqualified product category under the flexible spending account, and ifso then: determining a qualified amount of the total purchase amounteligible for use of the flexible spending account for the paymenttransaction for the product; and determining that the flexible spendingaccount for the payment transaction has sufficient assets for paying asummation of the qualified amounts of the total purchase amount eligiblefor use of the flexible spending account for the payment transaction forthe plurality of different products, and if so then: sending, inresponse to the payment network authorization request message, anauthorization response from the address of the issuer to the address ofthe payment network system, wherein the authorization response includes:the summation of the qualified amounts of the total purchase amounteligible for use of the flexible spending account for the paymenttransaction for the plurality of different products; and anauthorization for the use of the flexible spending account payment forthe payment transaction; sending the authorization response from theaddress of the payment network system to the address of the acquirer forthe merchant; and sending the authorization response from the address ofthe acquirer for the merchant to the address of the merchant.
 14. Themethod as claimed in claim 13, wherein the steps further comprisecompleting a sale of other said products in the payment transaction. 15.The method as claimed in claim 13, wherein the steps further compriseutilizing said payment network authorization request message to monitorcompliance with terms of said flexible spending account.
 16. The methodas claimed in claim 13, wherein the steps further comprise: preparing atransaction record of said payment transaction; and sending saidtransaction record to an address of an auditor of said flexible spendingaccount.
 17. The method as claimed in claim 16, wherein the stepsfurther comprise: receiving a plurality of said transaction records froma plurality of said merchants at the issuer of said flexible spendingaccount; grouping the transaction records received from said pluralityof said merchants and associated with the flexible spending account as aset of said transaction records; and sending said set of saidtransaction records from the address of said issuer to the address ofthe auditor.
 18. The method as claimed in claim 16, wherein the stepsfurther comprise: appending said transaction record to a payment networksettlement record; and sending the transaction record to the address ofthe issuer.
 19. The method as claimed in claim 18, wherein the stepsfurther comprise utilizing said payment network settlement record tocomplete payment for the payment transaction while forwarding saidtransaction record to the address of the auditor for monitoring flexiblespending account compliance.
 20. The method as claimed in claim 16,wherein the steps further comprise utilizing said transaction record tomonitor compliance with terms of said flexible spending account.
 21. Amethod of submitting product information of a flexible spending accountfor processing by an auditor of the flexible spending account, themethod comprising a plurality of steps, each said step being performedby one or more network devices by the execution of software, each saidnetwork device being in communication with a payment network, whereinthe steps include: preparing a transaction record for a transaction witha consumer for purchase of a product with the flexible spending account,wherein the transaction record includes: a product description field forthe product; a purchase amount field for the product; and a tax amountfield for the product; sending data in the transaction record from anaddress of a merchant to an address of an acquirer for the merchant;sending data in the transaction record from the address of the acquirerof said merchant to an address of a payment network system; sending datain the transaction record from the address of the payment network systemto an address of an issuer of the flexible spending account; sendingdata in the transaction record from the address of the issuer to anaddress of an agent of the issuer; determining, using predeterminedprogram compliance rules for the flexible spending account, whether thetransaction with the consumer for purchase of the product with theflexible spending account is permissible; receiving, when thetransaction is determined to be permissible, from the address of theagent of the issuer to the address of the issuer, a qualified amount ofthe total purchase amount eligible for use of the flexible spendingaccount for the payment transaction for the product; determining thatthe flexible spending account for the payment transaction has sufficientassets for paying the qualified amount of the total purchase amount, andif so then: sending an authorization response from the address of theissuer to the address of the payment network system, wherein theauthorization response includes the qualified amount of the totalpurchase amount eligible for use of the flexible spending account forthe payment transaction for the product and an authorization for the useof the flexible spending account payment for the payment transaction;sending the authorization response from the address of the paymentnetwork system to the address of the acquirer for the merchant; andsending the authorization response from the address of the acquirer forthe merchant to the address of the merchant.
 22. The method as claimedin claim 21, wherein: the flexible spending account identifier for theflexible spending account and the product inventory code correspondingto the product are input to an electronic Point Of Service terminal(POS); and the steps further comprise receiving the authorizationresponse at the POS.
 23. The method as claimed in claim 21, wherein thesteps further comprise, when the qualified amount of the total purchaseamount eligible for use of the flexible spending account for the paymenttransaction for the product is for a partial amount of the totalpurchase price, receiving input acknowledging payment, via a paymentsource other than the flexible spending account, for the differencebetween the total purchase amount for the product and the qualifiedamount of the total purchase for the product.
 24. The method as claimedin claim 21, completing a sale of other said products requested forpurchase in the payment transaction.